After the news of Finastra’s new product, an integrated consumer lending solution, Jeannette Kescenovitz, Finastra’s senior director of solution management, Banking-as-a-Service (BaaS), and orchestration, commented on the new service.
While discussing the solution in the context of Finastra’s current offering, Kescenovitz noted:
“Historically, financial institutions have used our products to offer lending services directly to consumers. We have thousands of financial institutions in the US running on our software. Embedded finance has opened up a $7 trillion opportunity, shifting finance out of banks and into contextual channels consumers use daily.”
Finastra’s ‘Embedded Consumer Lending,’ will offer clients an alternative payment option to Buy Now Pay Later (BNPL). The solution is now different from BNPL as it applies to higher-value purchases, whereas BNPL is normally unregulated and limited to those below £1,000 or £2,000.
“The Finastra Embedded Consumer Lending solution brings traditional, regulated lending products to consumers with the safety net of the risk and compliance capabilities of traditional banks.”
Using BaaS to guarantee that clients gain access to a marketplace of merchants and distributors, the solution provides a cheaper and more secure option in POS financing. Finastra says that the solution will benefit merchants, providers, and consumers by acting as a scalable platform in which the financial institutions and distributors can grow and interact.
“Seattle Bank is the first bank signed as a BaaS ‘provider’, Loanstar Technologies is integrated into the solution as a POS solution, as a ‘distributor’, and our distributors bring a network of hundreds of merchants across the US.”
Through embedded lending services, financial institutions can grow their marketplace and their products can reach a huge range of customers and merchants.
The solution has been confirmed at a critical time as new legislation for BNPL is getting rolled out in the United Kingdom. The UK government is calling on BNPL lenders to implement affordability checks to protect their consumers from a debt crisis. The slow-moving authorization process is leading to a downfall in BNPL share value, thus embedded lending has become highly significant.
Embedded finance is becoming highly prevalent among fintechs and banks, delivering financial institutions, consumers, and distributors with increased options in POS financing. The flexibility that embedded finance produces widens the reach of financial services and can transform payments.